How Can Japanese Extended Longevity Be Evaluated?- An Estimate of a Fruit of Economic Growth -

Substantial improvement in health conditions during 35 years from 1970 to 2005 has made Japan one of the top countries for longevity in the world, which is sometimes referred to as a fruit of economic growth (e.g. Yoshikawa (2003)). This paper tries to quantify value of the improvement by willingness-to-pay (WTP) for the mortality decline during the period, following Murphy and Topel (2003, 2006). Our results show the value may amount to165 trillion per year, about 30 per cent of GDP. An alternative assumption about consumption by the young and the elderly may increase the value by about 20 percent. Possible rages of the value of WTP are also shown, depending on pa-rameters of utility function. Effects of demographic changes are examined: an increase in population and progress in ageing with fewer children increase the WTP by 30 and 20 trillion yen, respectively. Looking ahead, a limited additional increase in survival rates, and smaller population, are likely to cut the WTP to about 60 trillion yen in 2040. Furthermore, health expenditures required for extended longevity are estimated to be less than a tenth of the WTP. This is a very rough calculation as cost-benefit analysis because other expenditures (e.g. those related to improvements in public san-itation and diets) could be recognized as costs. JEL Classification Codes: I10, D61